In late January, 2009, I presented some interesting data from Fidelity's 11 million 401(k) participants and their behavior during the tumultuous 2008 stock market decline. I concluded by saying, "...their investors are being pretty intelligent with their retirement nest eggs...Folks are continuing to save for retirement and fewer individuals are borrowing although there was a slight increase in hardship withdrawals. People didn't do more trading in 2008 compared with 2007 and investors in highly diversified lifecycle funds, which I have long recommended for giving investors a smoother ride, did the least trading. Companies by and large continued with their matching programs. All of this data shows how misleading so much of the gloom in the mainstream investment media misrepresents what the public is doing with their investments and what companies are doing with their retirement plans."

Now, we have some more research on retirement plan participants and this time Vanguard provides the data on their more than 3 million 401(k) plan participants.

Here are their report's key findings:

Account balances. Most participants saw a smaller decrease in their account balances due to last year's market decline than has been widely reported. "Continuous" participants (the 75% who had a balance at both the beginning and end of the year) had a median decline of 14% (the median is more indicative of most outcomes; it shows that half of participants had a balance change above this rate and half below). The median decline for an age group of particular concern-pre-retirees aged 55-64-was 16%. More than one-third of all continuous participants saw their balances either rise or stay flat because of ongoing contributions, conservative asset allocations, or a combination of the two. Conversely, about one-fifth of continuous participants experienced losses exceeding 30%, largely as a result of large equity allocations.

Contributions. Participant savings' behavior was relatively unchanged in 2008. Vanguard participants deferred an average 7% of their income in their plan. This deferral rate was down slightly from the 7.3% rate of 2007. The median participant deferral rate was 6%, unchanged since 2000. Taking into account both employee and employer contributions, the average total contribution rate was 10.4% and the median was 9.5%. These figures indicate that many 401(k) participants have fairly strong retirement savings rates.

Equity allocations. At the end of 2008, 61% of existing plan assets were invested in equities, a drop from 73% in 2007. The report estimates that 8 percentage points of this movement came from declining stock prices and 4 percentage points from participants shifting assets to fixed-income holdings. The 73% of contributions directed to equities in 2008 was not a marked shift from 2007. The overall average allocation suggests that most participants are taking a substantial, but still reasonable, level of equity risk in their retirement portfolios.

Trading activity. Despite last year's market volatility, most participants made no trades at all. Only 16% of participants traded during 2008 and just 2% abandoned equities. The remaining 14% engaged in a variety of other portfolio changes. For example, 3% reduced their equity exposure by more than 10 percentage points (but not to zero), while 1% shifted to an all-equity portfolio.

Rollovers. Participants who separated from service in 2008 largely preserved their assets for retirement. Sixty-nine percent either remained in their plan or rolled over their savings to an IRA or a new employer plan. At the same time, there was a small increase in the percentage of participants choosing to take cash and presumably spending their savings-up from 29% in 2007 to 31% in 2008. Overall, 92% of all plan assets available for distribution were preserved. An important trend has emerged-since 2000, there has been a meaningful improvement in the number of participants choosing to preserve their plan assets for retirement.

Loans and hardship withdrawals. The number of new loans issued during 2008 declined by 12% from the 2007 level. Only 2% of participants took hardship withdrawals in 2008, a figure slightly higher than in recent years but still low overall.

Automatic enrollment is leading to more workers being covered by a retirement plan. Because few people opt out of an automatic enrollment program, participation rates have improved dramatically for demographic groups that traditionally have lower voluntary participation rates. Employees covered by automatic enrollment plans at Vanguard had an overall participation rate of 84% in 2008 compared with 60% for plans with voluntary enrollment. About 20% of all Vanguard plans have adopted automatic enrollment, quadruple that of 2005.

"Our research underscores that 401(k) plans continue to be an effective retirement savings vehicle," said Stephen Utkus, director of the Vanguard Center for Retirement Research, who noted that the success of any retirement system must be judged not at its peak, or its trough, but over the lifetime of participants engaged in the process. "It's a mistake to anchor on the high point of October 2007 and assume that it was a guaranteed value. It's also a mistake to anchor on the low point of late last year, or of March 2009, and assume that balances will never grow again. With retirement savings invested in the markets, success has to be measured over the many years of accumulation-and the many years over which those savings will be spent."

In summary, consider how many of the findings here contradict the widespread (and negative) perceptions that retail investors dumped stock in droves last year, lost piles of money, and raided retirement accounts. This study's 401(k) participants only had a median decline of 14% in their account balances demonstrating that the vast majority of investors were well diversified and not overly invested in stocks. (And more than one-third of all participants saw their balances either rise or stay flat because of ongoing contributions, conservative asset allocations, or a combination of the two.)

These investors only reduced their stock market exposure by a mere 4 percent. And they did little trading - only 16% of participants traded during 2008 and just 2% abandoned equities. The remaining 14% engaged in a variety of other portfolio changes which were generally minor. These 401(k) participants deferred only saved slightly less money in 2008 (an average of 7%) versus 7.3% in 2007.

These investors didn't raid their accounts and borrow against them in a major way due to hardship. The number of new loans issued during 2008 declined by 12% from the 2007 level. Only 2% of participants took hardship withdrawals in 2008, a figure slightly higher than in recent years but still low overall.

Eric Tyson is the only best-selling personal finance author who has an extensive background as an hourly-based financial advisor and who does not accept speaking fees, endorsement deals or fees of any type from companies in the financial services industry or product or service providers recommended in his articles, books and his publications.